Unites States of America v. Apple, Inc. et al

Filing 186

Letter addressed to Judge Cote from Amazon.com, Inc. (Michael Kipling) dated 2/19/2013 re: Apple/Amazon discovery dispute. Document filed by Amazon.Com, Inc. (Attachments: #(1) Exhibit Zapolsky Decl., #(2) Exhibit A, #(3) Exhibit B, #(4) Exhibit C) (cr)

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Exhibit B 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------x UNITED STATES OF AMERICA, Plaintiff, vs. CASE NO. 12-CV-2826(DLC) APPLE INC., et. al, Defendants. --------------------------------x HIGHLY CONFIDENTIAL VIDEOTAPED DEPOSITION DAVID NAGGAR JANUARY 30, 2013 1918 Eighth Avenue Seattle, Washington REPORTED BY: PAUL J. FREDERICKSON, CCR, CSR JOB NO. 28641 DAVID NAGGAR - HIGHLY CONFIDENTIAL 114 1 2 116 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 DAVID NAGGAR - HIGHLY CONFIDENTIAL The decision that Amazon was not that interested "But Amazon may make more money with its model." 3 11:07:11 in an agency model, that was made by Mr. Bezos 3 Do you see that? 4 previously? 4 A. I do. MR. SUTTON: Objection. 5 6 11:08:58 A. No, it was made in a group setting with -- 5 Q. Do you believe that that -- that that's 6 true, that Amazon may make more money under the agency model than it had been under the reseller model? 7 Mr. Bezos was there but it was several of us 7 8 discussing the options with our lawyers. 8 MR. FRIEDMAN: Object to form. 9 MR. KIPLING: Object to form. 9 11:07:24 Q. And it was made earlier in the week? MR. KIPLING: Objection. 10 11 12 13 MR. SUTTON: Object to form. 10 Which week are you talking about? 11 BY MR. PARKER: 12 A. I don't know under this specific proposal. BY MR. PARKER: 13 14 has testified he went to New York and said that Amazon 15 wasn't interested in the agency model. looked at the economics of agency, whether from an 15 economic point of view it might be in Amazon's interest 16 A. Yeah. 16 to actually agree to the agency model? 17 11:07:31 Q. And I assume you were authorized by top 17 A. I just want to clarify something. 18 Q. Please. 18 19 management to say that; am I right? A. Yeah, I -- I don't remember when we 20 Russ and I discussed. I don't remember. 22 23 24 11:07:56 19 discussed it with Jeff. This may have been something 21 11:07:41 11:09:25 Q. Had Amazon ever looked at that, that is 14 Q. Well, what I'm referring to is the witness 25 11:09:36 20 21 A. You're referring to the agency model as a monolithic uniform model. You can see that in his email he's offering a 5 Q. Okay. All right. 22 percent commission on best sellers and a 20 percent The second to last paragraph, the last sentence 23 commission on back list. 24 says: 11:09:48 "I assume this agency model will change where Q. Right. 25 A. Which is a very different economic 115 1 117 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 2 proposition from a 30 percent commission across the 3 less on the back list, but you may make more money with 3 board. 4 11:08:10 you earn your margin, more margin on best sellers and this model." 4 Q. Which is what you ultimately agreed to, 30 5 Do you see that? 6 A. I do. 6 A. With HarperCollins, yes. 7 Q. Is that a true statement, in your judgment? 7 Q. Yes. All right. 8 9 11:08:20 10 11:09:56 MR. KIPLING: Object to the form. 8 Go ahead. A. I -- I don't know. Can you clarify a 5 9 percent? Did you -- did Amazon -- okay, that's a very good point. 10 Did Amazon ever do an analysis of the economics 11 little bit for me? 11 of the agency model under any assumption, of commission 12 BY MR. PARKER: 12 or whatever? 13 11:10:06 14 model would you make more margin on the best sellers 14 15 and less on the back list? Is that something you -- is 16 11:08:29 Q. Well, my question is that under the agency 13 that a true statement? 17 11:10:21 15 A. I don't remember seeing a specific financial analysis. 16 Q. Did you have -- had you seen any analysis 17 MR. FRIEDMAN: Object as to form. that suggested that under certain assumptions Amazon might make more money under the agency model? 18 A. I don't know. It is -- it is probably 18 19 11:08:44 MR. SUTTON: Objection. true on best sellers. I don't know that it's true on 19 20 back lists. 11:10:37 20 MR. SUTTON: Objection. A. Not that I recall. I don't remember any 21 Q. Okay. 21 specific analyses. 22 And it says but you -- and you understand "you" 22 BY MR. PARKER: 23 24 11:08:51 23 to be Amazon. Am I right? A. Yes. 25 Q. The way you interpret the document. Q. Wouldn't that be a logical thing to do? 24 11:10:47 MR. SUTTON: Objection. 25 MR. KIPLING: Object to form. 30 (Pages 114 to 117) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 118 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 2 3 4 1 2 Q. What are his duties and responsibilities? Q. I mean, why would you reject it without 3 A. He is a lawyer at Amazon. 4 Q. Business lawyer? looking at the economics? 5 MR. KIPLING: Same objection. MR. SUTTON: Objection. 7 11:12:34 5 6 A. We're very focused on the customer 7 8 experience first and foremost. Build a great customer 8 9 experience, and customers will respond to it by 9 10 engaging in your service. And our strong feeling was 11 that the customer would not be benefited by a move to 11 12 11:11:08 an agency model. 12 11:12:42 13 Q. Because? 14 11:11:23 A. They would pay higher prices. 15 Q. There would be no windowing. Isn't that a 16 DAVID NAGGAR - HIGHLY CONFIDENTIAL A. I don't know. 6 11:10:58 120 10 13 14 11:12:48 15 16 benefit? MR. FRIEDMAN: Objection to form. A. I'm not sure I understand that term. BY MR. PARKER: Q. Was he working with you on negotiating the agency contracts? A. At the time we were not negotiating agency contracts. Q. But at the time you did, was he working with you on those contracts? A. Yes, he was. Q. I mean, some lawyers work on litigation and some lawyers work on -- 17 17 MR. KIPLING: Objection to form. 18 Q. -- on contracts. He was more of a person 19 11:11:31 MR. SUTTON: Objection. 18 A. There was -- that is not a standard part 19 who would work on transactions and contracts -- 20 21 the agency model that there be no windowing. 11:12:58 20 21 Q. No. But in connection with your 22 negotiations on the agency model, you got agreements 22 23 that there wouldn't be any windowing. Am I right? 23 MR. SUTTON: Objection. 24 11:11:41 25 A. Oh, I see. MR. SUTTON: Objection. MR. FRIEDMAN: Object to the form. Q. Contracts the like; am I right? A. In my dealings with him, it was around 24 A. I -- I believe you are in most cases. 11:13:04 contracts. I don't know the rest of his 25 responsibilities. 119 121 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 2 Q. Thank you. 3 A. Yes. 3 David Zapolsky? 4 Q. Okay. 4 A. Yes. 5 Now, you talked about a meeting and you can't 5 Q. Who is he? 6 remember exactly when it was. Was it -- was it before? 6 A. Another lawyer at Amazon. 7 Do you think it was before your trip to New York or 7 8 11:11:54 Q. And that's a benefit to customers; right? after? 8 9 A. The meeting I was referring to earlier? A. I actually don't know. I mean, I know he was a lawyer that was in many of our meetings but I A. It would have been after. 11 don't know what his specific job duties were. Q. Okay. 12 Q. You didn't then and you don't now? You can't remember a date? 13 A. Now I know. A. No, that's the one that was right after 14 Q. And what does he do now? 15 A. Now he is general counsel. Q. Yes, sir. 11 12 13 14 15 9 Q. And what were his responsibilities as far as you know? 10 10 11:12:12 11:13:07 the John Sargent visit. 11:13:17 11:13:27 16 16 Q. Now he is a general counsel. 17 A. January 28. 17 And approximately when did that happen? 18 Q. All right. 18 A. A few months ago, I believe. 19 And so Tim Leslie was there? 19 Q. Okay. 20 A. Yes. 20 Very recently? 21 Q. All right. 21 A. Very recently. 22 And who is Mr. Leslie? 22 Q. Okay. Great. 23 A. An AGC at Amazon. 23 Michelle Wilson. She is a lawyer? 24 11:12:26 Q. Got it. Right. Q. I'm sorry, I don't know what -- 24 A. She was general counsel at the time. 25 A. Associate general counsel. 25 Q. Okay. 11:13:34 11:13:40 31 (Pages 118 to 121) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 122 1 2 3 4 11:13:47 124 DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 with something else that's permitted that doesn't invade A. I don't know her status with the company. 3 the privilege. 4 BY MR. PARKER: She is snow longer general counsel. 5 Q. All right. 6 Mr. Bezos was there? 6 7 A. Yes. 7 8 Q. Mr. Kessel was there? 8 9 11:13:54 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 So she has now left the company, Ms. Wilson? A. Yes. 10 12 5 Q. All right. What -- were there business decisions that came out of this meeting? A. Not as distinct from asking for lawyers' counsel as to what we could do. 9 Q. Laura Porco was there? 11 11:15:17 Q. Did you come up with a business strategy 10 for dealing with proposals by Mr. -- such as that A. Yes. 11 presented by Mr. Murray and others? Q. And you were there? 12 13 A. Yes. 13 14 Q. And Mr. Grandinetti was there? 15 A. Yes. 16 Q. All right. 16 So at that meeting did anybody outline the pros 17 11:15:32 14 11:15:46 15 MR. KIPLING: You can answer yes or no to this. A. No. MR. SUTTON: Objection. BY MR. PARKER: 17 Q. So what did you come up with? 18 and cons to Amazon of going to the agency model? 18 MR. FRIEDMAN: Objection. 19 MR. KIPLING: I'm going to object and 19 20 instruct the witness not to answer about what was 21 11:14:12 discussed in the meeting. 11:15:51 20 MR. KIPLING: That -- instruct him not to answer. You can ask him about what he did after the I've conferred with him and it was in his view and 22 meeting and what Amazon did after the meeting. 23 in my view a meeting at which legal advice was being 23 MR. PARKER: Oh, I'm about to. 24 11:14:25 21 22 sought and delivered by the lawyers for the company. 24 MR. KIPLING: Okay. 25 MR. PARKER: But I'm just asking. 25 THE WITNESS: That's correct. 11:15:56 123 1 2 125 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 BY MR. PARKER: 2 DAVID NAGGAR - HIGHLY CONFIDENTIAL BY MR. PARKER: 3 Q. Were you personally seeking legal advice? 3 Q. Was there any strategy of any kind that 4 MR. KIPLING: He -- I'm not suggesting that 4 came out of this meeting, strategic decisions for 5 Amazon? he was. I'm suggesting that Amazon was seeking legal advice. That's my client. And on that basis I'm 6 7 instructing this employee of Amazon not to answer the 7 And you can answer yes or no. 8 question. 8 A. No. 9 11:14:42 5 6 11:14:31 BY MR. PARKER: 9 10 Q. Was there any -- 11:16:04 11:16:15 MR. KIPLING: Object to the form. Q. So how did you leave it when you left? 10 Were you going to have another meeting or were you 11 MR. PARKER: I mean, Mike are you going to 11 going to continue thinking about it or -- 12 block me on any question here? I mean, I can't ask any 12 A. Yeah. We -- there is no definitive 13 question whatsoever? 13 14 MR. KIPLING: You've spent 20 minutes asking 15 him questions about this meeting which has probed who was 16 11:14:53 there, when it happened. 17 18 THE WITNESS: Okay? A. Not in that meeting, no. MR. KIPLING: How long it was, whether 18 Q. There was at another meeting? 20 exhausts what you're permitted to inquire about in a 19 11:16:43 MR. PARKER: All right. yeah, I am. Beyond what you've done, unless you come up not at the meeting where the decision was made. By -- who informed you? 24 11:16:51 Q. Okay. 23 MR. KIPLING: So beyond that I guess I -- 25 were pulling the buy buttons from Macmillan but I was 22 Well, I'm -- 24 A. At some point later I was informed that we 20 21 meeting that's privileged. 23 Q. Was there a decision to pull the buy buttons on the Macmillan products on the Amazon site? 17 documents were prepared, which I believe pretty much 22 15 16 21 11:15:10 11:16:27 decision when I left the meeting. MR. PARKER: Right. 19 11:15:02 14 A. Russ. 25 Q. What did he say? 32 (Pages 122 to 125) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 126 1 2 buttons on the Macmillan books." idea or did you agree with it or express any opinion at all? MR. SUTTON: Objection, form. 7 9 11:17:09 13 14 11:17:19 15 MR. KIPLING: I think he is, too. THE WITNESS: I think I -- 9 Q. Did he ask for your opinion as to whether 11:18:48 get back to question and answer form. BY MR. PARKER: 10 Q. You said earlier you understood why Amazon A. Not at that point, no. 11 was pulling the buy buttons on Macmillan, four or five Q. Did you express your opinion on whether 12 questions ago. What -- why were they doing it? 13 A. No. We had things to execute at that point. 11:19:03 A. To show to what level we felt that moving 14 that was a good strategy or not? to an agency model was not a model we wanted to move 15 to. 16 Q. You just executed? 16 17 A. At that point, yeah. 17 18 Q. All right. 18 19 11:17:28 MR. KIPLING: This is argumentative. Let's 8 that was a good strategy or not? 11 MR. FRIEDMAN: Objection to form. 7 A. No, I understood why we were doing it. 10 12 11:18:43 5 6 5 8 A. Right. 4 Q. Did you tell him that was not a very good 6 DAVID NAGGAR - HIGHLY CONFIDENTIAL buttons on Macmillan. 3 4 11:17:00 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL A. He said, "We're going to buy pull the buy 2 3 128 At any point did you express an opinion to 19 MR. SUTTON: Objection. A. I don't believe we picked on Macmillan at on Macmillan was a good idea? 11:19:10 A. I'm -- all. I believe Macmillan came out, presented a set of terms of sale, presented us with an ultimatum, and 22 Mr. Grandinetti as to whether pulling the buy buttons 21 20 21 20 22 Q. You picked on Macmillan because they were the smallest publisher? threatened us with an inability to offer customers new 23 23 releases if we didn't acquiesce to a move to an agency 24 11:17:37 MR. KIPLING: I'm going to instruct him not to answer what was discussed at the meeting with the 24 model. 25 general counsel of the company. But other than that, you 11:19:26 25 Q. So why didn't you do it to everybody else 127 1 129 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 2 2 3 BY MR. PARKER: 3 4 11:17:48 can seek an answer. Q. Go ahead. 4 5 A. No. I mean, we discussed how we would 11:19:34 5 6 respond to being forced into a model we didn't like. 6 7 Removing buy buttons was one option. 7 8 9 A. I think it was the right move. 10 Q. It was a disaster, wasn't it? 11 11:18:05 8 Q. Do you think it was a good idea? MR. SUTTON: Objection. 9 11:19:43 10 11 DAVID NAGGAR - HIGHLY CONFIDENTIAL too? A. No one else had presented us with the ultimatum at that point. Q. You wanted to make an example out of Macmillan? MR. SUTTON: Objection. A. No, we were responding to the specific offer that Macmillan had put in front of us. Q. What signal were you trying to send to the marketplace? MR. SUTTON: Objection. A. No. 12 13 Q. Did customers like it? 13 MR. KIPLING: Object to the form. 14 A. No. 14 A. I don't believe we were trying to send a 12 15 signal. We were dealing with a very specific 16 when the buy buttons on Macmillan were pulled? 16 instance. 17 11:18:13 A. No. Which is exactly why it was such a 17 15 18 Q. Did that create a good customer experience 11:19:51 hard decision. 18 Q. How did that work out for Amazon? MR. FRIEDMAN: Objection, form. A. Can you be more specific. 19 19 20 A. The decision was made anyway. 20 21 11:18:24 Q. You made the decision anyway. Q. Even if it was a bad experience for 21 Q. Well, did it end up being a good strategy 22 for Amazon? Did it achieve any business objective by 23 doing that? 22 23 customers in that -- in that instance? A. In the -- in our opinion moving to an 24 11:18:37 Q. No, no. I'm talking about pulling the buy 24 agency model was a worse experience for customers. 25 BY MR. PARKER: 11:20:08 MR. KIPLING: Object to the form. 25 A. It's hard to say. We wound up with a 33 (Pages 126 to 129) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 130 132 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 2 negotiated contract with Macmillan a week later. That 2 3 was the end result. 3 So let's look at this document while you were 4 out of the room I marked as Exhibit No. 7, an email. 4 11:20:16 5 Q. Sitting here today looking back on it, was that a good idea, pulling the buy buttons on Macmillan? 5 And you said you've seen it. Can you identify these 6 MR. FRIEDMAN: Object to form. 6 emails, sir? 7 MR. KIPLING: Object to the form. 7 8 MR. SUTTON: Objection. 8 myself, Russ Grandinetti, Steve Kessel and Tim Leslie 9 about a conversation with Brian. 9 11:20:26 11:26:13 Q. All right. A. I believe it was the right decision. 10 Q. You still do? 11 A. Yes, I do. 11 12 Q. All right. Okay. 12 MR. PARKER: Let's do the next document. 13 14 11:20:36 14 MR. PARKER: Oh, okay. All right. Fine. 11:26:45 We'll just do the tapes right now. 15 16 Q. Okay. And so the bottom email is one from Kessel to Grandinetti and David Naggar saying: "Let me know how the calls go today." Were you instructed to make calls to the publishers on January 25 of '10? A. We were either making or receiving phone 17 THE VIDEOGRAPHER: Here marks the end of disc 17 10 13 [Discussion off the record.] 15 16 11:26:26 A. Yes. It is an email thread between calls from publishers in followup to their -- the meetings the previous week in New York. 18 number one in the video deposition of David Naggar. 18 19 Going off the record. The time is 11:21. 19 Q. And what can you remember about what you 20 [Recess at 11:20 a.m.] 21 [Resuming at 11:25 a.m.] 21 22 11:21:05 [Deposition Exhibit 7 marked.] 22 it would be a very poor customer experience for us to 23 move to an agency model, that we didn't feel that 24 publishers were prepared to take on pricing. None of 25 them had hired any staff or done any other work to be THE VIDEOGRAPHER: Here marks the beginning 23 24 11:25:10 11:26:58 of disc number 2 in the continuing video deposition of 25 David Naggar. Back on the record. The time is 11:25. 11:27:20 20 were communicating to the publishers? A. We were continuing to voice our view that 131 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 2 books in a digital environment, where it should be 4 BY MR. PARKER: prepared to handle consumer pricing for thousands of 3 EXAMINATION CONT'G 2 3 133 dynamic. And that we didn't feel we wanted to move to 5 an agency model. 4 5 could not inquire about what happened at the meeting 6 but I can inquire about what you did coming out of the 6 Q. Did you commence discussions nonetheless 7 11:25:19 Q. We were talking about this meeting, and I meeting. 7 about what an agency model might look like at this 8 time? 8 9 11:25:27 11:27:33 And so the question is, tell me what you did 9 coming out of the meeting. MR. SUTTON: Objection, form. 10 11:27:45 A. No. We were mostly in listening mode, 10 hearing what the publishers were going to put in front of us. BY MR. PARKER: 11 12 Q. Go ahead. 12 13 A. Yeah. I -- we left the meeting without 13 agency at that time? 11 Q. And in a mode of resisting the move to 14 11:25:42 making any final determinations as to what next steps 14 A. Correct. 15 were. So I was really just waiting for a next step. 15 Q. All right. 16 Q. So you were just waiting for instructions? 16 17 A. Sure. 17 Q. Is it fair to state the meeting you're 18 18 19 right? 21 22 Q. Brian being Brian Murray? A. Brian Murray, yes. 22 came out, yes. 20 21 11:28:06 A. I -- if that's the date that John Sargent the document says. So Brian Murray. Q. All right. Okay. 23 Q. Okay. 23 24 11:26:02 A. I know it more in relation to that event 24 25 than the calendar. A. Just got off the phone with Brian, is what 19 talked about was on the 28th of January? Is that 20 With whom did you speak on January the 25th, you personally? 11:28:14 25 And please describe your conversation with Brian. A. Aided by the email, because I don't 34 (Pages 130 to 133) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 DAVID NAGGAR - HIGHLY CONFIDENTIAL 134 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 2 136 1 remember the specific conversation. DAVID NAGGAR - HIGHLY CONFIDENTIAL 2 there was a document being prepared for Mr. Bezos 3 setting forth the pros and cons of Amazon moving to the 4 agency model? 5 going to be part the Apple announcement. Didn't seem to be wedded to specific agency models. He was 6 A. I have no recollection of such a document. 7 willing to look at various options or at least he led 7 Q. You've never heard of it? 8 me to believe he had the ability to mix and match his 8 A. I have no recollection of such a document. 9 11:28:40 3 A. He was still unsure of whether they were 6 11:28:23 Q. Right. 4 model. 9 Q. Okay. 10 11 Q. And what did you communicate to him about 11:30:42 11:30:51 5 10 MR. SUTTON: Objection, form. Was there -- setting aside a document. Were you 11 your position? A. That we were still very strongly objecting assigned to come up with a presentation, whether orally 12 or written, about the pros and cons of the agency 13 to an agency model. 13 model? 14 Q. Did you -- 14 A. No, I was not. 15 A. And we didn't want to go there. 15 Q. Do you know whether anybody was? 16 Q. Did you give him any hope there might be 16 A. No, I don't. 17 some compromise here that you might be able to work 17 Q. Could you see personally any benefit to 18 out? 18 Amazon going to the agency model as of the 25th of January? 12 11:28:49 11:31:11 19 A. No. 19 20 Q. You did not. All right. 20 A. No. 21 11:28:57 And it's on the 25th of January you got to work. 21 Q. Okay. 22 Did Mr. Grandinetti advise you that the day before he 22 23 attended a meeting with Mr. Bezos in his boathouse? 23 we described, and shortly thereafter you, Amazon, 24 pulled the buy buttons on Macmillan; correct? 25 MR. SUTTON: Objection, form. 24 11:29:16 A. I have no knowledge of such a meeting. 25 Q. Did he simply tell you that he had met with 11:31:52 So on the 28th you had a meeting with the people 135 1 2 137 DAVID NAGGAR - HIGHLY CONFIDENTIAL 1 Mr. Bezos and others over that weekend? 2 3 3 Q. He never mentioned it to you at all? 4 5 A. He did not. 5 6 11:29:25 A. He did not. 4 Q. And so how did you know -- he came in and 6 7 said, "Look, what we've got to do is call these 7 8 publishers and continue discussions"? 8 9 DAVID NAGGAR - HIGHLY CONFIDENTIAL A. The next day. Q. And you were personally involved in executing that strategy? A. Yes. Q. What did Mr. Grandinetti tell you about why you were doing that? MR. SUTTON: Objection, form. 9 A. Well, there was no difference in our A. We were taking them down because they had 10 stance from the week before, which was we were very 10 presented us with an ultimatum and terms we couldn't 11 much against agency and we were looking to find out 11 live with and told us we had no option but to go with 12 what the publishers were going to do and how far they 12 those terms. 13 11:29:36 were going to push it. 13 14 11:32:10 Q. Okay. 14 Q. And if you didn't go with those terms, what did Mr. Sargent say would be the consequences? 15 A. Well, he said, "You have a choice. You 16 people at Amazon were preparing a document setting 16 can either go to the agency model or you cannot see 17 11:29:47 forth pros and cons of the agency model for Mr. Bezos? 17 new releases for seven months." 15 18 Isn't it a fact that you told Mr. Murray that MR. SUTTON: Objection. 19 20 Q. Were you the only one that had a 18 conversation that day with Mr. Murray? 11:32:43 Q. It was, I'm sorry, seven months? 19 A. Not to my knowledge. 21 11:30:15 11:32:31 A. I believe it was seven months, yes. 20 21 Q. So it was sign up with the agency model or windowing; am I right? 22 22 A. Yes. Q. Do you know if Mr. Grandinetti did? 23 Q. All right. 24 11:30:26 A. I don't know. 23 A. I do not. 24 25 Q. Was it the truth that internally at Amazon 11:32:54 25 How long were the buy buttons pulled on Macmillan titles? 35 (Pages 134 to 137) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099

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